CME GROUP INTERNAL © 2014 CME Group. All rights reserved. CME Group Henry Hub June 12, 2014

CME GROUP INTERNAL © 2014 CME Group. All rights reserved.

CME GroupHenry Hub

June 12, 2014

© 2014 CME Group. All rights reserved.

Agenda

• CME GROUP INTRODUCTION

• ENERGY AT CME

• NATURAL GAS

• HENRY HUB Overview History Contract Specs Location About the Contract Henry Hub Product Slate


Contracts Traded Annually

3 BillionMajor ProductClasses

6 Pioneers of Financial Futures

Hour Access

24Industry-LeadingMarket Liquidity Years of Industry

Expertise

160

CME GROUP OVERVIEWThe worlds largest and most diverse marketplace

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ENERGY AT CMENYMEX ENERGY PRODUCTS – TRULY GLOBAL

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WHY TRADE? WHAT DRIVES ENERGY PRICES?Physical energy products are subject to myriad fundamental price drivers, and derivatives help hedge against future price volatility.

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GLOBAL DEMAND

OPEC

TAXES

ENVIRONMENTAL POLICIES

LOGISTICS AND INFRASTRUCTURE

GEOPOLITICAL CONFLICTS

CURRENCY FLUCTUATIONS

CHANGING SUPPLY LANDSCAPE

PRODUCTION TECHNOLOGY SEASONALITY


NATURAL GASNatural Gas has accounted for about one third of the total energy volume traded at CME NYMEX

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© 2013 CME Group. All rights reserved

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Natural Gas is moved by pipelines from producing fields to consumers

• 305,000 miles of transmission pipelines

• 11,000 delivery points

• 5,000 receipt points

• 1,400 interconnection points

The North American Natural Gas market is robust with many dynamic trading points, with Henry Hub as the foundation.


HENRY HUB All about Henry Hub - Overview

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• Henry Hub launched in 1989• It is the third largest physical commodity futures

contract in the world by volume• Widely used as a national benchmark price for natural

gas, which continues to grow as a global energy source

• Located near Louisiana's Gulf Coast, the hub connects to four intrastate and nine interstate pipelines

• The entire hub can transport 1.8 billion cubic feet per day (Bcf/d).


HENRY HUB History

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• The "Henry" hub is so named for its location in the Henry hamlet of Erath, which was named after the Henry High School that stood there until recently. This school was named for its benefactor, William Henry, who originally immigrated from Germany. There are Henry descendants in the area to this day.

• The Henry price is used to compute location ‘basis’ at all other natural gas trading points in North America and thus is the reference price for tens-of-thousands of derivative instruments and other commercial contracts.


HENRY HUB (HH)Contract at a glance

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Daily Volume for NG is averaging over 390,000 contracts in 2013

© 2013 CME Group. All rights reserved 11

Henry Hub is key location in US Nat Gas Supply ChainContract Specs

•10,000 mmBtus

•Physically deliverable at Erath, LA if not offset prior to expiration

•Listed monthly for next 10 years

Henry Hub – key delivery point

Basis points

Transport and storage implications

Chicago+.905

AECO- .6358

SoCal+ .174

PG&E Citygate

+ .35

NWP- .035

Waha- .12

HSC- .084 Henry Hub

$5.214

North American Natural Gas Pricing and Trading ‘Hubs’

Hub NamePrice / Typical

Differential from HH

Legend


HENRY HUB (HH)Things to know about contract

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• Natural gas futures prices are based on delivery at the Henry Hub in Louisiana

• Traded via open outcry, electronically on CME Globex and off-exchange for clearing only as an EFS, EFP or block trade through CME ClearPort.Located near Louisiana's Gulf Coast, the hub connects to four intrastate and nine interstate pipelines


HENRY HUBHenry Hub Natural Gas Futures Product Slate

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1. Our benchmark Henry Hub Natural Gas Futures (NG) contract – the most liquid natural gas contract in the world

2. The Henry Hub Natural Gas Look-a Like Last Day Financial Futures (HH) contract – the same size as our NG contract and making it easy for you to trade out of NG into HH if you want to hold onto your position in the market

3. Our Henry Hub Natural Gas Last Day Financial Futures (NN) contract – allows you to hedge your basis risk and is highly correlated to our NG contract

© 2013 CME Group. All rights reserved 14

March- April

SpreadHigh Low Settle

Trading Range

30-Jan 0.891 0.561 0.653 0.3331-Jan 0.531 0.386 0.489 0.1453-Feb 0.422 0.363 0.398 0.0594-Feb 0.729 0.412 0.71 0.3175-Feb 0.975 0.478 0.484 0.4976-Feb 0.706 0.352 0.369 0.3547-Feb 0.431 0.284 0.259 0.147

• Gas trades monthly, quarterly, yearly and in seasonal stripsApril – October Injection Season (Summer)Nov – March Withdrawal Season (Winter)

• Because of the changeover between seasons, the March/April spread is interesting…and volatile

Gas Trading and Seasonality


CONTACT US

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• Learn more about Clearing Membership Options at cmegroup.com/clearingmemberships and Non-Clearing Membership Options at cmegroup.com/nonclearingmemberships

• For more information on energy or how to access our market, please contact [email protected]

CME GROUP INTERNAL © 2014 CME Group. All rights reserved.

THANK YOU


“CME Group”, “CME Europe” and “CME Clearing Europe” are brands of CME Group Inc. and its subsidiaries, members of which include Chicago Mercantile Exchange Inc., CME Europe Limited, CME Clearing Europe Limited and CME Marketing Europe Limited.

Exchange traded and Over-The-Counter (OTC) derivatives are not suitable for all investors, and involve the risk of loss. Exchange traded and OTC derivatives are leveraged investments, and because only a percentage of a contract’s value is required to trade, it is possible to lose more than the amount of money initially deposited for an exchange traded or OTC derivative position. Therefore, traders should only use funds that they can afford to lose without affecting their lifestyles. And only a portion of those funds should be devoted to any one trade because they cannot expect to profit on every trade.

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The information within this presentation has been compiled by CME Group for general purposes only. Although every attempt has been made to ensure the accuracy of the information within this presentation, CME Group assumes no responsibility for any errors or omissions. Additionally, all examples in this presentation are hypothetical situations, used for explanation purposes only, and should not be considered investment advice or necessarily the results of actual market experience. All data is sourced by CME Group unless otherwise stated.

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CME Europe Limited is a Recognised Investment Exchange (RIE) recognised and supervised by the Financial Conduct Authority in the United Kingdom. CME Clearing Europe Limited is a Recognised Clearing House (“RCH”) recognised and supervised by the Bank of England. CME European Trade Repository is a business name of CME Trade Repository Limited, a registered trade repository under EMIR supervised by the European Securities and Markets Authority. Globex Markets Limited is authorised and regulated by the Financial Conduct Authority.Chicago Mercantile Exchange Inc. is a Recognised Overseas Clearing House (ROCH) recognised by the Bank of England. Chicago Mercantile Exchange Inc., Board of Trade of the City of Chicago and the New York Mercantile Exchange are Recognised Overseas Investment Exchanges (ROIE’s) recognised by the Financial Conduct Authority.

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CME GROUP INTERNAL © 2014 CME Group. All rights reserved. CME Group Henry Hub June 12, 2014